This SAE Aerospace Recommended Practice (ARP) describes the concept of life cycle costing with emphasis on LCC techniques and applications as applied to the phases of the program cycle. These phases are:
a) conceptual studies, research, development, test, and evaluation (RDT&E);
b) investment, or procurement
c) operation and support (O&S) or in-service
d) disposal of systems, equipment, and services.
Cost elements, estimating techniques and other factors which have a bearing on LCCs are described; including use of cost estimating relationships (CER), simulation techniques, and 'top-down'/'bottom-up' approaches. Consideration is also given to:
a) risk and uncertainty assessments
b) impact of economic variations including inflation, interest rates, and exchange rate variation
c) adoption of discounting techniques when undertaking investment appraisals.
The use of tailored LCC models is preferred since there is an advantage in adopting a range of approaches particularly for the prediction of the costs of future technology and estimates of uncertainty which are specific to the aerospace industry.